Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
A newbie guide?
Does anyone have links to great resources for information regarding home jargon, or just in general knowledge a first time home buyer should have?
We're tentatively talking about buying our first home in the next six months and I feel over-whelmed by all the terminology I don't understand. I also have no real grasp of information from different associations, programs available for assistance, or laws regarding what a homeowner has to make public knowledge.
Some general questions I have: What is the difference between a foreclosure and short sale to a buyer?
Do sellers have to disclose safety issues within a home, such as mold, unstable foundation or poor structure? Do they have to give a home history (past fires, bug damage, flooding, ect) if prompted?
Are closing costs paid up front or are they tacked onto your home loan?
Are these questions I should be asking a real estate agent?
I've lurked the board and searched around for questions similar to these and haven't found too many. I know that many of the ladies posting on here are very knowledgeable about this subject.
Is there some guide for newbies or a FAQ? I've only seen the tools for calculating at the top! If you ladies don't have some sort of newbie guide, I'd totally love it if you made one.
We're tentatively talking about buying our first home in the next six months and I feel over-whelmed by all the terminology I don't understand. I also have no real grasp of information from different associations, programs available for assistance, or laws regarding what a homeowner has to make public knowledge.
Some general questions I have: What is the difference between a foreclosure and short sale to a buyer?
Do sellers have to disclose safety issues within a home, such as mold, unstable foundation or poor structure? Do they have to give a home history (past fires, bug damage, flooding, ect) if prompted?
Are closing costs paid up front or are they tacked onto your home loan?
Are these questions I should be asking a real estate agent?
I've lurked the board and searched around for questions similar to these and haven't found too many. I know that many of the ladies posting on here are very knowledgeable about this subject.
Is there some guide for newbies or a FAQ? I've only seen the tools for calculating at the top! If you ladies don't have some sort of newbie guide, I'd totally love it if you made one.
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Re: A newbie guide?
Congrats on such a big decision! I not a real estate agent, but I am a settlement agent (known as an escrow officer in CA.. I actually used to live there) so this is my business! Under the best of circumstances, buying a house is confusing, emotionally draining, and will keep you up at night so be prepared for some bumps and just roll with it because it will be worth it! There are many types of loans you can get, but the most common for a first time buyer is an FHA loan. Essentially, you will have to pay 3.5% of the purchase price out of pocket as your down payment, not necessarily including closing costs. Closing costs vary and are typically several thousand, but it is very common these days for sellers to give a credit for your closing costs so I'm sure that's something your realtor will negotiate when you get to that point.
It is best to talk to a bank first to get pre-qualified to find out how much you can potentially spend on your home, then you can start looking for a realtor. Ask around.. neighbors, co-workers, etc. Don't assume that the person whose face you see plastered all over town is the best (often, the over-exposed realtors are just the face and you will end up with an associate agent anyway, not actually them).
Once you know how much you can spend and have a realtor, they will help you look for homes. Short sales and foreclosures can be great deals, but they come with caveats. Biggest difference between the two is the length of time it will take to close. Foreclosures tend to be quick closes: the bank has already taken the house from the previous owner and is now motivated to get if off their books. There will probably be a lot of other offers and the banks aren't as willing to pay for closing costs, so you may not get it as "cheap" as you have in your head. A lot of times there are costly repairs that need to be done and you will most likely have to do some work to get it liveable, but when all's said and done, you've probably still made a great deal.
Short sales are another story.... A great deal? usually.. but they take FOREVER! The bank hasn't actually foreclosed the loan yet and the bank basically has to agree to take X amount of dollars as a shortage (ie, if the seller owes $400,000 on the loan but you only offer to buy the house for $350,000, they have to get approval for the $50k shortage.) Short sales can take months and months and months. I have closed escrow on short sales that went fast (60 day closes), but that is the exception and NOT the rule. Especially if the seller has 2 loans. I have 22 short sales in my pipeline right now, 16 of which I have had for over 6 months and still don't have approval so the buyers have been waiting to buy the house this whole time with no end in sight.. it's really frustrating.
Bottom line is, talk to a bank, find a realtor, and they will take you through all you need to know. Don't expect to learn it all, I do this every day and I am still learning new things all the time! Good luck!
The information on the short sales specifically is invaluable. I would definitely prefer to avoid that sale-type.
I'm glad you let me know about the closing costs typically associated with them. I'll also have a start to research FHA loans. We're mostly interested in foreclosures because we've seen some that appear to have minimal and easy to fix damage for very good prices in okay to decent neighborhoods.
Once again, thanks for the jump start! I really appreciate it.
read:
home buying for dummies
mortgages for dummies
how to buy a house in california (nolo is the publisher)
all of the most recent editions of the above books answer your questions. i'd start with the nolo one.
ETA: i didn't read the entire wall of text by the other poster, but saw "pre-qualification" when skimming. get preapproved rather than prequalified. in many california markets even now, you may still be competing with others on a property. sellers are more likely to accept a preapproved buyer's offer over a buyer with none of the above or only prequalification. google will tell you the difference as will the books i listed above.
I just wanted to touch on something mentioned above. Just because a bank prequalifies or preapproves you for a certain dollar amount does not mean you should look at houses in that range. We were preapproved for way more than we would ever feel comfortable spending. Look at your budget, downpayment, etc and figure out what a monthly payment would be comfortable taking into account utilities, property taxes, and insurance. With an FHA loan, you will also pay a monthly PMI (mortgage insurance) which is basically extra money because you did not have 20% down on the property.
If you are focusing on foreclosures, most likely you will get limited info about the history on the home because the bank owns and obviously did not live there for 20 years. I saw your questions about floods, bugs etc so just go into this with an open eye. The foreclosures we saw were not in good shape because the prior people stope paying months/years ago and some damaged the home when leaving. We also saw several cases of mold because the home had been vacant and not aired out in months.
Thank you! Great information on both counts. I'll definitely look into the books and also into approval rather than qualification.
Thanks for the information. We already have a number in our head that we're not okay with going higher than. I think it's a fair number for our area but not setting the bar too high for our needs. We definitely won't start shopping around until we've heard from the bank and adjust our comfort level.
I would never want us to be struggling to make the bills so comfortable is the ideal. As for the foreclosure, the reasoning about history makes sense. I'm not sure we'd go with a foreclosure but if we did, it'd have to be one in okay or easy to repair shape which is the exception in the market that I've seen, not the rule.
I totally understand! I've heard people say oh we were preapproved for $300k, should we look up to $350k and negotiate down? That makes me cringe!!
I do understand about the foreclosures. We recently saw one when looking for my mom and it was one of the nicest foreclosures my realtor had ever seen. Electricity was on, the previous owner had put in new carpet and painted, the roof was newer. Kitchen was a little outdated but it was a home you did not feel dirty in and could literally move right into! Good luck finding a home! Its a really stressful process but in the end, it will be worth it!
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